PathToChina.com

http://www.flaminghoops.com/

Can you explain the difference between a “Representative Office” and a “Wholly Owned Entity” in Shenzhen/China, especially as it relates to hiring people and getting visas for a foreigner and his family?

Certainly.  With either a Representative Office (”Rep Office”) or a Wholly Foreign Owned Entity (”WFOE”) hiring local staff and visa considerations for foreigners are easily resolved.Representative Office hiring local staff and visa considerations for foreignersa)  Staff: If a Rep Office is the chosen vehicle, you shall be permitted to hire as many local staff as you wish.   However, all your staff must be registered with FESCO, which is a local Government employment agency.  Only a Rep Office must comply with this odd provision, which requires that a Rep Office pay up to about 1000 RMB per month, per person that is hired.  There is no real value recieved for the employer in this situation.  It’s just one of those

(more…)

Translated  by Vincent Cheung from www.pathtochina.com

For registered capital of less than 10 million YUAN, 0.08% of total registered capital will be charged.  For registered capital of more than 10 million YUAN, 0.04% of the excess will be charged. For registered capital of more than 100 million YUAN, no  charge for the excess. 300 yuan will be charged for the registration of branch. When the enterprise needs to apply for the duplicate of enterprise legal person business license, 10 yuan cost fee will be charged for each copy.

600 yuan will be charged for the registration of establishment of representative office; 100 yuan will charged for the registration of the alteration of representative office, 300 Yuan  will be charged for the extension of registration.  

In cases of  registered capital re-injection,if the re-injected capital plus the original registered capital is less than 10 million YUAN, 0.08% of the increased portion will be charged for  registration fee. If the total capital exceeds 10 million YUAN, 0.04% of

(more…)

By Vincent Cheung from www.pathtochina.com 
China wine Market Analysis

 According to the “Wine in China: A Market Analysis 2006”, total production of wine grew by 114.98% between 200 and 2006, to reach a total industry volume of over 500 million litres  and total consumption of wine grew by 108% between 2000 and 2006 to reach a total market volume of 575 millions litres. We witness a dramatic increase in grape wine consumption in the past 7 years. If the statistic doesn’t make real sense to you, be ware of that:  the total production of spirit is 3.5 billion litres , roughly 7 times of wine production of 2006 ; and the annual production of beer in China is more than 35 billion litres, (more…)

Translated by Vincent Cheung from www.pathtochina.com , 

check out the Chinese version  

The latest 《White Paper on Environment for Foreign Investment in Shanghai》 issued last month selects the Top 10 foreign-invested companies of Shanghai on the basis of investment scale。

 These Top 10 Companies are： GE, Sumitomo, Hitachi, Itochu, Mitsubishi, Mitsui Fudosan, Siemens, Fuji Film, Marubeni, VW.The top 10 companies have made a total investment of 4.828 Billion dollars in 561 projects, accounting for more than 30% of the fortune 500 companies’ total investment projects in Shanghai, i.e. 21% of fortune 500 companies’ total investment capital in Shanghai.

Till the end of 2006, there have been 257 “Fortune 500” companies that invest in Shanghai, with an accumulative 1884 investment projects, including 1537 projects undertaken by manufacturing or trading companies, accounting for 82% of the (more…)

 From www.fdi.gov.cnArticle 1 These provisions are formulated hereby pursuant to the Company Law of the People’s Republic of China, the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures, the Law of the People’s Republic of China on Chinese-Foreign Contractual Joint Ventures, the Law of the People’s Republic on Foreign-capital Enterprises and other pertinent laws and regulations to promote the healthy development of enterprises with foreign investment, protect the legitimate rights and interests of investors, and maintain social and economic order.

Article 2 “Alteration of investors” equities in enterprises with foreign investment as used in these Provisions refers to alteration of investors of Sino-foreign equity joint ventures, Chinese-foreign contractual joint ventures, enterprises with foreign investment set up on the territory of the People’s Republic of China (hereinafter referred to as the enterprise) or their shares (hereinafter referred to as equities) of investment in the enterprise (including terms of cooperation they provide). It will include, but will not limit to, the following major factors leading to alteration of investors’s equities in enterprises with foreign investment: (more…)

Gathered By Vincent Cheung from www.pathtochina.com 

In China, there are three different social benefit schemes and their application depends on the employee’s “hukou”.

1. Urban Social Insurance – for Shanghai residents residing in urban areas
2. Township Social Insurance – for Shanghai residents residing in Shanghaisuburb areas such as Qingpu, SongJiang, NanHui, JinShan, etc.
3. Integrated Social Insurance – for non- Shanghai residents

For urban and township social insurance, the company’s contribution is equivalent to 44% and 32% of the employees’ salary respectively. This contribution would go towards the employees’ pension, unemployment, medical, workplace and maternity insurance as well as public housing fund. In addition, a minimum and maximum salary range applies for the contribution to various insurance items and public housing fund.It’s very important for foreign employers to have a good understanding of China’s mandatory welfare payment system when hiring Chinese staff. (more…)

1.   Minimum Registered Capital ≠ the Real Amount of Registered Capital

This might be the most misunderstood area in setting up a FIE in China. A great number of newly-established companies run out of money and put themselves in a very awkward situation soon after the company registration due to less sufficient registered capital. Only a small proportion of our clients are suggested inject exactly the same amount of initial investment capital with minimum registered capital in the process of company registration, however, those cases are not supposed to be applied to others. So don’t you never ever try to take advantage the minimum registered capital policy without calculating carefully the right amount of registered capital enough for you to run your business. You will suffer a lot from re-registering the capital, which usually takes more than 6 weeks, out of underestimation  of registered capital. Even if everything goes swimmingly in the process of re-registration, you will find your money has already been ”stolen” : the re-injected capital is considered as your profit, meaning it’s (more…)

This is an article about company name in China from www.lawcase.org.  Click here to check out the original article.

1、what parts does a company name consist of?

With the exception of those prescribed by relevant laws, regulations and rules, a company name shall consist of, in the following order, “location”, “trade name (firm name)”, “industry” and “organization form”. The trade name in a company name shall include 2 Chinese Characters at least.
(1)Upon the approval of the State Administration for Industry and Commerce (SAIC), the enterprise that meets one of the following conditions may use a company name without “location”: With the establishment approved by the State Council; with the registration in SAIC; with the registered capital (or registered fund) not less than 50 million RMB; with other condition prescribed by SAIC.

(more…)

From www.hewn.com 

  On May 29, 2007, the State Administration of Foreign Exchange of China (SAFE) issued “Operating Procedures Clarifying Equity Finance and Return Investments by Domestic Residents Through Offshore Special Purpose Vehicles”, further clarifying its earlier-released “Circular No. 75”—which relates to foreign exchange control on financing and round-trip investment by domestic residents through offshore special purpose vehicles (SPVs). The Operating Procedures impose new compliance burdens on venture capital and private equity firms involved in transactions with Chinese “round-trip” investors—that is, Chinese individuals and companies who set up offshore SPVs to invest back into

China. The Operating Procedures are linked to the foreign exchange registration requirements that are set forth in both Circular No. 75 and the 2006 M&A Regulations. They provide a detailed roadmap of the documentation and intricate registration requirements for the multiple stages of SPV financing, including:

(1) setting up the offshore SPV; (2) injecting offshore assets into the offshore SPV;(3) establishing, acquiring or investing in a PRC onshore target through the offshore SPV (i.e., round-trip investment);

(4) changing or restructuring the offshore SPV.

The Operating Procedures state that they will come into effect immediately, although they are not yet available on SAFE’s official website. Most of the new rules, however, have been known for some time as “internal guidelines” among those in the

China venture capital and private equity communities.

 click here for the complete version (PDF) of the operating procedures  click here for the analysis of the operating procedures(PDF)  

Provide by www.PathToChina.com“”Path To China “ is an International Business Consulting Firm that provides foreign investors with business registration service in China. For business advisory service , please contact Vincent by vincent@pathtochina.com.

Shanghai: Tel: (8621) 5102.5279 Email: sales@PathToChina.com Suite 9B, 485 HeNan Road (N.) Shanghai 200071

USA: Tel: (303) 8006616 Email: sales@PathToChina.com 3801E, Florida Ave., Suite 412, Denver, Co. 80210

By Vincent Cheung  from www.pathtochina.com

 After 13 years’ of drafting and revising, China’s first anti-monopoly legislation, which requires foreign mergers and acquisitions or foreign capital investing in domestic companies’ operations in other forms to go through national security checks, is most likely to be passed next week, and if passed by the standing committee of China’s National People’s Congress, China’s parliament., it will come into effect on August 1, 2008. The draft bill, aiming to protect fair competition, prevent and examine monopolistic behaviors and maintain a regulated marketplace, was first drafted in 1994. As a matter of fact, due to the law’s tolerance towards the domestic monopolistic enterprises, because “they are beneficial to national economic development or in the interest of the public”, most of people focus a great deal of attention on the foreign purchases mergers and acquisitions issue. Official figures state that foreign mergers and acquisitions merely accounted for 5% of all forms of foreign direct investment in China prior to 2004.The figure has sharply risen to 11% in 2004 took a huge leap upward to close to 20% by 2005. In recently years, over 200 applications for mergers and acquisitions of Chinese companies are submitted, however, there are few actions taken by the government to prevent foreign companies’ purchases of local companies, except for the controversial case of Carlyle Group’s acquisition of XCMG. China is becoming more selective about foreign investment as the policy makers’ growing concern that excessive foreign investment would make

China’s economy run out of control. The officials complain that some sales of local companies give away state assets way too cheaply and concede too much control to foreign firms.  (more…)